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Estimating the Cost
of New Construction
Using PERCEPTION
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Computerized Cost Estimating
• Computer-based tools to quickly
formulate a cost estimate
• Manage cost data from central database
• Maintain current catalog of actual costs
• Maintain catalog of prior estimates
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Establish Libraries of
Centrally Available Cost Data
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Benefits
• Fewer cost surprises
• Faster bid response
• Lower cost risk
• Greater profit potential
• More competitive bids
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Basic Tool Set:
Application of learning curves
Complexity & productivity factors
Cost escalation
Cost risk analysisCost risk analysis
Cost trade-off
Global edits and update features
Return cost data analysis
User documentation of cost estimate
Tracking of estimate sources and changes
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Work Breakdown Structures
The cost estimates are developed according
to a Work Breakdown Structure (WBS):
• Identify work items
• Identify work process costs
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Identify Work Items
Work Items may be cataloged by
• Ship System WBS (SWBS)
• Shipyard Product WBS (PWBS)• Shipyard Product WBS (PWBS)
• Ship Owner’s WBS
• Government Contract Line Item (CLIN)
Each structure can be customized by shipyard, by contract.
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Identify Work Process
Work Process may be cataloged by
• Stage of Construction (Rip-Out, Shop Work,
On-Unit, On-Block, On-Board, Test)On-Unit, On-Block, On-Board, Test)
• Shipyard Department (COA)
Each structure can be customized by shipyard, by contract.
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Cataloging Standard Costs
Catalog
Standard Cost
Estimating
Relationships (CERs) Relationships (CERs)
onto Computer
Database
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What is a CER?
A Cost Estimate Relationship (CER) is a formula relating the
cost of an item to the item’s physical or functional
characteristics or relating the item’s cost to the cost of
another item or group of items. another item or group of items.
Examples:
a) for steel block assembly, 25 man-hours/ton;
b) for pipe material, $25/meter; and
c) for shipyard support service, 10% production
hours.
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Cataloging Standard Costs By
Work Sequence
LOFT
PLAN
PREP FAB ASS'M P/OHOT
ERECTP/O
COLDBLASTPAINT
Pre-Outfitted Hull Block Construction
Equipment & OutfitSystem Modules
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Hull CERs by Block Type
50.00
60.00
70.00
Steel Production
Mid
-Ship
Blo
cks
Tank T
ops
Avera
ge
Para
llel I
nn
er
Bo
ttom
s
Avera
ge S
hap
ed Inne
r B
ott
om
s
Low
er
Sid
e T
anks
Uppe
r S
ide T
anks
Spar
Dec
k 'T
ween H
atc
he
s
Avera
ge W
eath
er
Decks
Ave
rage L
on
gitu
din
al B
hds
Avera
ge T
rans
vers
e B
hds
Scre
en B
ulk
head
s
Prep & Fab
Assembly
Erect
On-Ship WeldTotal-
10.00
20.00
30.00
40.00
50.00
Labor Hours
Per MTON
Mid-Ships Block Types
Stage
of Construction
Prep & Fab
Assembly
Erect
On-Ship Weld
Total
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Complete Equipment Packages
Cargo Zone Packages
Develop Standards of Labor &
Material Cost Packages
Accommodations Outfit Packages
Safety Equipment Packages
Electronics Packages
Shipyard Services Packages
.....and more.
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Cataloging Standard Costs By
Sequence
• Rip-Out
• Replace
• Repair
� Engineer
� Fabricate
� Assemble• Repair
• Install
• Test
� Assemble
� Install
� TestEngineering
Specificat ionsProductionDrawings
ShopFabrication
ComponentInstallation
SystemTests
Rip-Out Repair Re-Install Test
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Possible Levels of
Product-Based CERsCargo Hold
Block Erection
Outfit Fittings
Mhrs/BBL
Mhrs/Ton
Mhrs/EA
Outfit Pipe
Block Paint
Block Assembly
Steel Fab
Steel Prep
Mhrs/IN-FT
Mhrs/SQFT
Mhrs/Ton
Mhrs/Ton
Mhrs/Ton
Pro
du
ct
&P
roc
ess
Se
qu
en
ce
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Outfit CERs by
Stage of Construction
Pipe Work
450,000
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1 2 3 4 5 6
Ship Number
Lab
or
Ho
urs Total
On-Ship
On-Block
Pipe Fab
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Cataloging Standard Costs By
Ship System (SWBS)
• Structural Work
• Machinery
• Electrical
• Paint• Machinery
• Piping
• HVAC
• Paint
• Outfit
• Shipyard Services
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Bow Construction Zone Cargo Construction Zone
Cataloging Standard Costs By
Ship Zone (PWBS)
Machinery Construction Zone
Deckhouse Construction Zone
Stern Construction Zone
Ship-Wide Construction Zone
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Variations of CERs:
Single V-butt weld size 3/16" - 5/16" (2 pass) 0.250 MH/FT
Line Item CER:
Re-Use Package CER:
Welding Repairs:Cracks Labor CERLabor UoMMaterial CER
Drill Out 0.500 MH/FT -$
Welding Repairs: 0.250 MH/FT 1.4680$
Gen Labor: 0.250 MH/FT -$
Total: 1.000 MH/FT 1.4680$
Re-Use Package CER:
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Variations of CERs:
CERs Based Upon Ship Design & Performance Characteristics:
Labor Hours Material Cost UoM
CER CER CERCER CER CER
Cargo Transfer Pumps 0.0606 $22.93 GPM
Paint 15.59 $425.17 CuNo
Shafting 0.1695 $20.26 kW
Dry Docking $0.27 Days-GRT
Hauling $0.50 Days-LOA
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Variations of CERs:
CERs Based Upon Multiple Parameters:
Main Propulsion
Installation Labor Hours 2.27 x [Displacement x Speed^3]/[SQRT(LWL)^3]
Ship Characteristics Parameters
Displacement - LTONs
Speed - Knots
LWL - Feet
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Cost Adjustments
Cost = fadjust x Standard CostCost = fadjust x Standard Cost
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Automating Cost Adjustments
�Work Productivity
�Work Site
�Work Access�Work Access
�Economic Cost Escalation
�Learning Experience
�Standard Material Savings
�Material Waste Adjustments
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Impact of Work Productivity
• Alternate Methods: Expensive staging versus mobile
lift
• Automation: Manual versus automated welding• Automation: Manual versus automated welding
• Alternate Resources: In-House versus Sub-Contract
• Worker Skill Level
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Impact of Work Site
Added Cost Factor
500%
600%
0%
100%
200%
300%
400%
In Shop On Block On Board
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Impact of Work Access:
Added Cost Factor
40%
50%
60%
0%
10%
20%
30%
40%
On W
eath
er D
eck
Oil
Tanks
Engin
e R
oomS
uperst
ructu
reP
ump R
oom
Hold
sD
ouble B
ottom
s
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Impact of Work Access:
Over-Head Down-Hand
More Difficult = More Expensive
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D-2,500 Ton Auxiliary
E-100,000 Ton Combatant
F-8,000 Ton Combatant
G-Submarine
Ship
.Type
Productivity vs Ship Type and Shipyard
1
2
3
45
6
7
8
11
Shipyard
0 100 200 300 400 500
Manhours per Lton
A-45,000 Ton Supply/Oiler
B-40,000 Ton Auxiliary
C-17,000 Ton Auxiliary
Ship
.Type
1112
13
14
1522
23
24
Based on Strutural data
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Impact of Cost Escalation:
Cost Escalation Index
1.35
1.40
Escala
tio
n I
nd
ex
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1995 1996 1997 1998 1999 2000 2001
Year
Escala
tio
n I
nd
ex
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Impact of Learning:
Cost Reductions From Repeatability
120%
Perc
en
t o
f F
irst
Item
Co
st
0%
20%
40%
60%
80%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Number of Similar Items Worked
Perc
en
t o
f F
irst
Item
Co
st
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Impact of Standard Materials:
�Standard material items typically less
expensive than non-standard items.expensive than non-standard items.
�Standard material deliveries less
expensive than high-priority rush orders
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Cost Risk Analysis
$1,400
$1,600
$1,800
Cost Risk
MinimumExpected
Maximum
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Range of Costs
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Cost Risk Analysis
Cost Probability
100%
120%
0%
20%
40%
60%
80%
$0 $500 $1,000 $1,500 $2,000
Cost Range
Pro
bab
ilit
y
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Hardware Options
Single User Laptop Single User Desktop
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Hardware Options
Multi-User Network
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Many Report Formats
• Detail Cost Item Reports
• WBS Summary Reports• WBS Summary Reports
• Major Equipment Lists
• Detail Bills of Material
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Cost Detail Information
• Labor Hours
• Labor Costs
• Material costs
• Total Direct Costs
• Taxes & Duties
• Indirect Costs
• Profit
• Total Cost
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Other Capabilities:
• Import/Export: Spreadsheets & Databases
• Data Analysis Module: statistical analysis of cost information to develop CERs
• Return Cost Module: link to shipyard • Return Cost Module: link to shipyard production management systems
• Link to CAD systems: automated cost estimating from design process
• Link to CAD systems: automated down-loading of bills of material
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Over 35 Years Serving the Shipbuilding &
Repair Industry